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Foreign Aid and The Arms Trade: A Look at the Numbers

By Joan Whelan
July 1998

Executive Summary
An examination of $13.6 billion in U.S. foreign aid activity for Fiscal Year 1997 reveals that almost half of the aid is military in nature. This assistance, in conjunction with large-scale arms exports, may actually be working counter to many stated U.S. foreign policy objectives such as promoting sustainable development, protecting human health and fostering economic growth. Does the United States invest more in militarization than in development globally? The answer, the data shows, is a resounding "yes." Further, based on the Clinton Administration's foreign aid request for FY 1999 and recent Congressional debate, it appears that this trend will continue.
An analysis of U.S. foreign assistance and arms exports in FY 1997 shows:
  • The United States spent approximately $2.50 per person (non-U.S. residents) on foreign aid in Fiscal Year 1997. Of this, military and security assistance totaled $1.25 per person (non U.S. residents) while peacekeeping and humanitarian intervention accounted for another $0.40 per person. The remainder, approximately $0.85 per person, was spent on development aid. Meanwhile, in the same time period, the United States exported weapons worth more than $2 per person on earth. This is based on conservative estimates of total weapons transferred in that year.
  • One-quarter of all U.S. foreign aid was sent to high income nations. This works out to a per capita expenditure of over $5/person for the 638 million living in high income nations. Meanwhile, the more than 3 billion living in the world's poorest countries received the equivalent of only $0.96/person.
  • The two largest recipients of foreign aid, Egypt and Israel, are also two of the largest U.S. arms customers. Aid to the two countries accounted for 40% of total U.S. foreign aid disbursed overseas in FY 1997 while arms shipments to the two nations accounted for 15% of total arms shipments that same year.
  • In recent years, the United States has approved hundreds of millions of dollars worth of commercial licenses for weapons sales and joint production between defense manufacturers and a number of governments involved in, or recently emerging from, civil war or other forms of conflict. Such agreements were approved in the case of Angola and Bosnia, two of the largest recipients of U.S. conflict and post-conflict intervention assistance.
The economic and social welfare of Americans are inextricably tied to the economic and social welfare of people across the globe. Nevertheless, U.S. foreign aid programs are increasingly under fire and the budget is some 50% lower, in real terms, than it was in 1985. Indeed, according to the State Department, the United States contributes less, relative to our GNP, to foreign aid than any other of the world's wealthiest nations. Of the aid the U.S. does give, much of it, billions of dollars worth, are involved in the direct transfer or financing of military equipment.
Meanwhile, the U.S. holds a disproportionately large share of the global arms market with 49% of all weapons sales. These transfers can increase the threat of war, help fuel arms races and represent huge opportunity costs that limit economic and social development. We pay for these long-term costs in our aid budgets and in diminished security and economic opportunity.
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